Photo: Roland zh. UBS Global AM appoints John Dugenske as Global Head of Fixed Income
UBS Global Asset Management announced the appointment of John Dugenske as Global Head of Fixed Income with immediate effect.
John was most recently Head of North American Fixed Income for UBS Global Asset Management. He succeeds Rob Gambi who is leaving the firm after seven years.
John will become a member of the UBS Global Asset Management Executive Committee, reporting to John Fraser, Chairman and CEO of UBS Global Asset Management. He will remain based in Chicago.
During his career, John has held senior roles in New York, Chicago and London. Prior to joining UBS Global Asset Management in 2009, he was Head of European and Middle East Fixed Income at the former asset management business of Lehman Brothers, where he also held global responsibility for the Cash Management business.
John Fraser, Chairman and CEO of UBS Global Asset Management, said: “John is a seasoned investor with more than 24 years working in fixed income. During his career, he has had responsibility for a wide range of investment portfolios across the fixed income spectrum as well as extensive experience working with a broad array of clients”.
He added, “I am confident that John is well positioned to build on our strong global platform and breadth of capabilities to lead our Fixed Income business forward”.
Foto cedidaFoto: www.robeco.com. Eurozone Not The Problem For Once
The eurozone isn’t the world’s problem child for once after US political wrangling caused a partial shutdown of government in the world’s most powerful nation.
Debt ceiling debacle
Democrat President Barack Obama is at loggerheads with the Republican controlled US House of Representatives, which has linked his request to raise the $16.7 trillion debt ceiling to avoid a default to partisan policies.
It means that for once, the eurozone isn’t the biggest issue facing investors, following an upbeat month that showed economic growth improving and large-scale political problems avoided, says Léon Cornelissen, Robeco’s chief economist.
“We think the US government shutdown will be short lived, as it is highly unpopular and could turn out to be very damaging to the Republican Party,” he says. Equity market volatility has been rising since the crisis began at the start of the month.
“Furthermore, in our opinion, no US president would allow the US to default. The most likely outcome is that the Republican front will break before a default is imminent.
“Otherwise Obama would resort to emergency measures as a last resort. We think the current political theatrics will temper economic growth only temporarily. The US economy is showing underlying strength, as demonstrated by the healthy developments of the ISM manufacturing and non-manufacturing indices.”
“Current political theatrics will temper economic growth only temporarily”
Tapering? What tapering?
Investors were surprised when after months of fanfare about the impending tapering of quantitative easing, the US Federal Reserve decided not to start scaling down its $85 billion-a-month program in September after all.
“But given the underlying strength of the US economy, the start of tapering is inevitable in the coming months,” says Cornelissen. “As markets are now completely left in the dark about future Fed policy, making a call on the precise moment that tapering will begin is very difficult, and it will be highly dependent on recent economic data.”
Eurozone confidence is improving
The US’s problems lie in contrast for once to improving confidence in Europe. European PMI surveys for September confirmed that the eurozone recovery is gaining traction, and political problems have abated.
Economic recovery is being led as usual by Germany, but France has also returned to growth, and data for Italy and Spain were also upbeat. Italy avoided yet another change of government, while Angela Merkel’s re-election as German Chancellor confirmed a strengthening European leadership, Cornelissen says.
Headline inflation in the EU fell in September to 1.1% on a yearly basis, and core inflation dropped to 1.0%. This gives the European Central Bank some room for additional stimulus, although it won’t be in a hurry to act, due to the current economic recovery. However, we should not get carried away, as the eurozone remains vulnerable to political risk, Cornelissen says.
World economy also improving
More generally, the world economy is recovering steadily. “Inflationary developments have in general been benign, so there is no need for central banks to reign in their ultra-loose monetary policy,” he says.
And the Japanese economy is currently clearly improving, as illustrated by the reading for the Tankan survey for large manufacturers which rose in the third quarter from 4 to 12. ‘Abenomics’ is on track, and the ‘third pillar’ of stimulus is eagerly awaited, though the upcoming sales tax hike does carry risks for growth, he says.
Asset class top picks
Regarding asset classes, Robeco’s Financial Markets Research team remains neutral on equities. “Delayed withdrawal of excess liquidity by the Fed is sustaining expansion of equity market multiples, but risks remain,” Cornelissen says.
Risky assets such as equities performed well in September, thanks to the Fed’s decision not to start tapering. However, higher rates and the end of easy money are still on the horizon, and Robeco prefers to wait for a correction in equity markets before raising the weight of equities in portfolios.
High-yield bonds are still Robeco’s favorite asset class. Our strategists expect default rates to remain low in the near term and in their opinion absolute return is still very decent. While they are positive on corporate bonds, the team is negative on government bonds because the current environment of low or negative real interest rates makes sovereign debt unattractive relative to higher-yielding fixed income classes.
China strong but emerging markets mixed
Real estate remains out of Robeco’s favor due to its sensitivity to potentially higher interest rates once tapering does start. And the outlook for emerging markets is mixed, Cornelissen says. “The Chinese economy is showing acceleration and China is heading for a strong third quarter, but the big question is whether this accelerated growth is sustainable,” he says.
“We remain neutral on commodities. Although we think that escalation risk from ongoing tensions in the Middle East has eased considerably, with no military intervention in Syria and conciliatory noises coming from Iran, we think energy prices will move sideways.
Investment managers characterize the U.S. economy as resilient, whether or not the Federal Reserve curtails its current quantitative easing (QE3) program, according to a survey by Northern Trust. The survey of approximately 100 managers, took place between September 4 and September 18.
“Throughout 2013, investment managers have weighed the impact of politics and policy decisions against a steadily improving economy in their market outlook,” said Christopher Vella, Chief Investment Officer for Multi-Manager Solutions at Northern Trust. “Regarding the budget stand-off, it seems as if Washington’s continued infighting was not news to Wall Street, and managers expected that gradual strengthening of key indicators would prevail over short-term political factors. Optimism on the economy also appears to outweigh Fed policy changes that have been anticipated by the financial markets.”
Managers expressed optimism on several key economic factors:
86% believe job growth will either remain stable or accelerate over the next 6 months
71% expect housing prices to rise over the next 6 months
89% expect corporate profits to remain stable or increase in the fourth quarter
Investment managers identified a change in Federal Reserve monetary policy or QE tapering as the top risk to equity markets. Long-term interest rates are expected to rise when the Fed tapers its bond purchases under the QE program. However, more than 60 percent believe the U.S. economy will keep growing if the 10-year rate rises by 50 basis points, and 42 percent of managers said long-term rates could rise by 1 percent without stifling economic growth.
Looking outside the U.S., managers are seeing value in Emerging Markets equities after losses in those markets in 2013. About two-thirds (64 percent) of managers believe emerging markets equities are undervalued, up from 49 percent in the second quarter. However, managers don’t expect strong performance to return soon: Only 23 percent of managers expect emerging market equities to outperform developed market equities over the next 6 months. Managers also view European equities favorably, with more than half (53 percent) saying European equities are undervalued. Most managers (69 percent) believe the Japanese equity market is undervalued or appropriately valued.
On the bullish-bearish spectrum for asset classes and broad economic sectors, managers continue to be most bullish on U.S. large-cap equities, U.S. small caps and emerging market equities:
62% of managers are bullish on U.S. large caps.
For small-caps, 53% of managers are bullish, down from 59% in the second quarter.
51% are bullish on emerging market equities versus 53% in the second quarter.
Managers were most bullish on information technology, industrials and health care.
For more details, please see the full Investment Manager Survey Report on Northern Trust’s web site. For its survey, Northern Trust polls investment firms that participate in its multi-manager investment programs and funds. The select group of respondents includes fixed income and equity managers across value and growth styles, with a bias toward fundamental, bottom-up stock picking strategies. The survey is conducted quarterly so that Northern Trust and participating managers can examine trends in attitudes and allocations.
The index is a market-capitalization-weighted total return index. It covers the largest and most liquid small-cap companies that derive at least 50 percent of their revenue from gold or silver mining, or have properties that do so. The composite includes companies based in the U.S. and other markets, including Australia, Canada and Singapore. As of Sept. 15, 2013, the index had average and median market capitalizations of $362.46 million and $294.74 million, respectively.
“At a time when a growing number of investors are expressing interest in exposure to companies engaged in the exploration and production of gold, we are offering liquid exposure to this sector with the benefit of added leverage,” said Eric Falkeis, President of Direxion. “These two Funds are designed for traders that wish to take a bullish or bearish stance on the gold-mining industry.”
Morgan Stanley Investment Management has created a new institutional share class aimed at increasing transparency and lowering fees for defined contribution plans and other institutional platforms. These Class IS shares have no distribution, shareholder service or sub-transfer agency payments and are intended primarily for retirement plans with more than $250 million in assets. Class IS shares are also available to eligible investors who meet an initial investment minimum of $10 million. Eighteen Morgan Stanley funds are now available through IS shares.
“At Morgan Stanley Investment Management, we look to offer all of our shareholders the right combination of funds, share classes and pricing. Now, we have refined our institutional offerings with the new IS, or super institutional, share class to help our institutional clients more easily meet their platform design needs. This new share class provides the greatest transparency for investors on the costs of investment management within their plan. We encourage plan sponsors to discuss with their record keepers or plan administrators whether the IS share class is suitable for the structure of their retirement plan,” said Paul Price, Global Head of Distribution for Morgan Stanley Investment Management’s Long-Only Business. “We are proud of the work we have accomplished to bring this state-of-the-art share class to our clients.”
“Morgan Stanley Investment Management has always offered a dynamic family of funds led by world-class investment managers. Our IS share class enhances flexibility and transparency and will create ease-of-use for institutional investment platforms, and these advances will ultimately benefit the plan participants who use Morgan Stanley funds to help meet their own investment objectives,” said Arthur Lev, Head of the Long-Only Business for Morgan Stanley Investment Management.
Foto: Maik Meid. Shhh... the Macroeconomist is About to Speak
The world is hanging on the macroeconomists’ every word. Their analyses of US economic indicators had become almost totally irrelevant for investors – but now times have changed.
Economists were ignored last year because movements in the financial markets did not revolve around the classical economic pillars of consumption growth, employment, export and investments. Instead, they were driven by what we could call ‘technicalities’ – the Fed’s impressive bond-buying program.
It was these monthly purchases of USD 85 billion worth of government bonds and mortgages that determined market sentiment. In the same way as a conductor decides how his orchestra will play, the US central bank determined the rhythm and timing in the financial markets. However, conductor Ben Bernanke has now indicated that he will be taking a less prominent place on the podium.
It is worth examining the statistics again
This means that the members of the orchestra will have to get to grips with the music themselves once again. How should all the pieces be interpreted – allegro or fortissimo? What is the real state of the US economy? What are the indicators actually saying about the US economy? If the last meeting of the US central bank made anything clear it’s that the Fed itself is being influenced more than ever by the statistics reflecting the health of the US economy. Those numbers are of crucial importance to the question as to whether the central bank should gradually taper its stimulus policy.
Excessive focus on consumers
So the macroeconomists’ narrative is once again gaining kudos among investment teams. However, it is striking that the macro analysis is in many cases now geared to the wrong part of the economy. The emphasis is on Joe Sixpack, the consumer side of the US economy, leading to fierce debate on the unemployment numbers. The question is, are these unemployment statistics an accurate reflection of labor supply? Have Americans perhaps become so somber about their chances of a job that they are giving up – the so-called discouraged workers? Important and interesting discussion though this is, it doesn’t get to the heart of the matter.
Business holds the key to recovery
Where things really matter right now in the US economy is on the corporate side. After all, Mr. Average US Consumer reverted to his old spending patterns pretty soon after the credit crisis broke. And the predicted dramatic increase in savings levels has not materialized. This means that the United States has now reached the point where higher economic growth will have to come from companies. Without businesses, economic growth will not manage to rise above the somewhat tepid 2% mark. Are businesses going to earmark funds for investment in machinery and other capital goods and to expand their workforce? What’s the state of play?
The corporate starting point is healthy
If you look at the current level of corporate investment as a percentage of national income, then this is rising but remains historically low. At the same time, the profitability of US corporates is quite frankly high.
Earnings are averaging some 12% of that same national income. Crucially, profitability has not been this strong in the last forty years. US companies are doing very well, thank you. With such a favorable starting point, the key is to focus on forward-looking indicators, including the monthly survey among purchasing managers of large corporates. They recently reported real growth in their order books. Combined with the fact that inventories are pretty low, that is good news.
But when will businesses dare to start taking risks again?
Every shred of new information on ‘corporate US’ potentially provides insight into the entrepreneurial ‘animal spirits’ that are so crucial to robust economic growth. And that’s why investors should once again be sitting on the edge of their chairs when the macroeconomy is being discussed.
Chilton Trust Company, a trust company and wealth management firm serving high net-worth individuals, families, trusts, foundations, institutions and endowments, announced that it has welcomed three senior wealth management professionals to its team: Harry S. Grand, Senior Vice President and Head of Client Relations; David Phelps Hamar, Senior Vice President and Head of Wealth Advisory Services; and Benjamin Brewster, Senior Client Relations Advisor.
Harry Grand, who joined Chilton Trust in January, oversees all relationship management activities for clients and is a member of the External Managers Investment Committee. Before joining Chilton Trust, Mr. Grand served as a Senior Vice President and Relationship Manager at Lazard Wealth Management, where he was responsible for investment policy formation, asset allocation and client relationship management. Prior to Lazard, he was a Client Advisor at Rockefeller & Co. He began his time there as the Chief of Staff to the President and CEO and as Manager of Marketing and Sales. Mr. Grand earned a B.A. from Hamilton College and an M.B.A from Columbia Business School.
David Hamar will oversee wealth advisory services and coordinate family office services for various clients. Before joining Chilton Trust, Mr. Hamar was a Managing Director, Member of the Management Committee, Portfolio Manager, Co-Chairman of Family Office Services and Director of Global Tax Services at Silvercrest Asset Management. Prior to Silvercrest, he was a Managing Director, Portfolio Manager and Chairman of the Tax Services Group at Heritage Financial Management, LLC. Mr. Hamar earned a B.A. from Old Dominion University and a J.D. from the University of Virginia School of Law. He is a Certified Public Accountant and is admitted to the Virginia State Bar.
Ben Brewster will serve as a Senior Client Relations Advisor to various clients located throughout the U.S. and provide counsel to the firm’s strategic initiatives. Mr. Brewster is a highly regarded wealth and investment professional with over 25 years of experience in the industry. Before joining Chilton Trust, Mr. Brewster was a Managing Director at Silvercrest Asset Management Group, providing investment advisory and family office services to its clients. Prior to Silvercrest, Mr. Brewster led Heritage Financial Management, a Charlottesville, Virginia-based investment advisory firm, which traced its origins to a family office started in 1929.
Chilton Trust also announced that Senior Vice President John C. Rau will assume the position of Head of Fiduciary Services and oversee all fiduciary and trust-related services. Mr. Rau joined Chilton Trust in 2010 with over 25 years of experience in fiduciary wealth management. He began his career as a trusts and estates attorney with Sullivan & Cromwell and later was a partner at Gunster. Mr. Rau earned a B.A. from Hamilton College and a J.D. and LL.M. (in Taxation) from New York University School of Law, where he was a member of the Law Review. He is admitted to the Florida, New York and Connecticut State Bars.
BNY Mellon has named Paul Nobile as chief marketing officer for Investment Management. Based in New York, he will report to Peter Paul Pardi, global head of distribution and R. Jeep Bryant, executive vice president for marketing and corporate affairs. Nobile was most recently at Eaton Vance in Boston, where he was chief marketing officer.
Prior to joining Eaton Vance, Nobile held a series of progressive marketing positions at Barclays Global Investors (BGI) in San Francisco from 1997 to 2009, culminating as Managing Director and head of Brand Marketing for the iShares Exchange Traded Funds. In that role, he led the development of global positioning of the iShares brand across the Americas, EMEA and Asia Pacific.
“Paul has an excellent track record in positioning, activating and amplifying investment management brands and enhancing distribution efforts globally,” said Pardi. “As we invest in expanding the BNY Mellon Investment Management enterprise in partnership with our 15 investment boutiques globally, we are confident that Paul can advance our leadership position through his outstanding experience and continued innovation.”
“BNY Mellon is committed to building a brand that reflects the client focus, investment expertise and global capabilities of our investment management business,” said Bryant. “Paul’s marketing expertise and industry experience will accelerate our efforts.”
A graduate of Syracuse University with a B.A. from the S. I. Newhouse School of Public Communications and B.S. from the Maxwell School of Citizenship and Public Affairs, Nobile also has FINRA Series 7, 63 and 24 licenses.
Senior executive recruiter Laura Pollock announced the launch of Third Street Partners, a boutique executive search firm specializing in the investment management sector. The new company is located at 424 Madison Avenue, 7th floor, New York, NY, 10017. David Schumer has joined the firm as principal.
“Third Street is about leveraging best practices gleaned from more than a decade and a half of experience in investment management recruiting at both large and boutique executive search firms,” said Ms. Pollock. “David and I share the belief that focus, transparency and access enable Third Street Partners to optimally serve clients and candidates.”
Third Street Partners conducts retained searches and partnership consulting projects with a broad range of traditional and alternative investment organizations. Its core clients span institutional and intermediary distribution, insurance companies, investment subsidiaries, banks, high-net-worth firms, RIA’s, OCIOs, plan sponsors, endowment, foundations and family offices. The functional areas where the firm has expertise include senior business management, investments and distribution positions. Third Street Partners represents both global and regional investment management firms.
“It’s absolutely essential to me and to the members of my team that Third Street is a true partnership between our search firm, our clients and the candidate universe,” Ms. Pollock said. “That is why I named the firm Third Street – to encapsulate the urgency that all three constituents in a search be served by the highest standards. Only through a consistently hands-on, transparent process can a search be successfully executed.”
